Zagro Asia

[RBM]

Thank you for your Zagro posting of yesterday evening dydx - I very much agree with the contents of your message.

I note that a short while ago today there are about 400,000 "Bids" at S$ 0.265 and a similar number of "Ask's" at the S$ 0.270 level. The bargain hunters are definitely out! 117,000 shares had been traded by about 1.20 pm. I'll admit I'm trying to nibble some more, despite the crowded trade - I fear the price may go up a tad following an affirmative vote at tomorrow's Zagro EGM. I suspect some of the sellers are shareholders who do not hold a Singaporean CDP address - they are barred from taking up their share of Skopini's units at S$ 0.15.

Zagro's end 2011 asset valuation per share is some ~ 18% above the effective price of ~ S$ 0.241 mentioned in dydx's posting yesterday (corresponding to a share price of S$ 0.270 once full take-up of the Zuellig-Skopini offer is applied). And this will give a (rather predictable, based on the previous 9 years experience) ~ 4.15% yield.

It will be interesting to note what happens in the next 3.1/2 SGX trading sessions.

Vested

The Circular to Shareholders (dated 17Jul12) providing all pertinent info on and supporting the proposed Settlement Agreement with Skopini Ltd/Zuellig Group makes interesting reading.....
http://info.sgx.com/listprosp.nsf/5ec09b...f000ded5f/$FILE/ZAL%20EGM%20Circular.pdf
The EGM to approve the implementation of the Settlement Agreement is set for 1Aug12.

As part of the Settlement Agreement, Zagro Asia is supposed to receive from Skopini Ltd/Zuellig Group a cash payment of $1.139m (expected in Sep12), which is expected to raise EPS by $0.0044 in 2H-FY12 (ending 31Dec12).

At today's (30Jul12) closing share price of $0.27, the proposed 32-for-100 Preferential Offering of Zagro Asia shares by Skopini Ltd/Zuellig Group at a discounted price of $0.15/share, will provide an investor of 100 lots an opportunity to achieve a lower average price of $0.2409/share after taking up the offer in full. Quite an attractive deal IMHO, considering Zagro Asia has a steady business and consistently pays out a $0.01/share yearly dividend.

Shareholders/investors do take note that trading on Zagro Asia shares will go ex-Zuellig Offering on 6Aug12.

---

[RBM]

Following on from my posting on this VB Zagro thread of four(4) hours ago ........... it got interesting from 16.55 hrs p.m. onwards as regards trading of Zagro shares on the SGX - some 298,000 shares traded in the last five minutes or so at S$ 0. 270 per share, including a single trade of 200,000 shares.

A total of 470,000 Zagro shares were traded today - that is heavy for this counter. Personally speaking, I believe investors today are getting into a well managed little company at what will effectively be a very respectable price.

Vested - apologies for any bias in the above.

Thank you for your Zagro posting of yesterday evening dydx - I very much agree with the contents of your message.

I note that a short while ago today there are about 400,000 "Bids" at S$ 0.265 and a similar number of "Ask's" at the S$ 0.270 level. The bargain hunters are definitely out! 117,000 shares had been traded by about 1.20 pm. I'll admit I'm trying to nibble some more, despite the crowded trade - I fear the price may go up a tad following an affirmative vote at tomorrow's Zagro EGM. I suspect some of the sellers are shareholders who do not hold a Singaporean CDP address - they are barred from taking up their share of Skopini's units at S$ 0.15.

Zagro's end 2011 asset valuation per share is some ~ 18% above the effective price of ~ S$ 0.241 mentioned in dydx's posting yesterday (corresponding to a share price of S$ 0.270 once full take-up of the Zuellig-Skopini offer is applied). And this will give a (rather predictable, based on the previous 9 years experience) ~ 4.15% yield.

It will be interesting to note what happens in the next 3.1/2 SGX trading sessions.

Vested

[RBM]

Zagro's EGM convened earlier today 1st August 2012 approved the Skopini-Zuellig deal. Please refer to the SGX disclosure below.

There are now two(2) more trading days to go before Zagro shares goes XCTO - i.e. as of coming Monday 6th August 2012 opening of SGX trading, shares will no longer be able to participate in the "32 for 100" at S$ 0.15 per share offer. Today's SGX trading of Zagro shares, i.e. of 240 lots indicates, to me atleast, a slight hardening of Zagro's share price - Bid's now being placed at the S$ 0.27 level. Lets see what happens to Zagro's share price over the coming days, particularly as it goes XCTO next Monday.

++++++++++++++++++++++++++++
ZAGRO ASIA LIMITED
(Co. Reg. No. 199406784D)
RESOLUTION PASSED AT THE EXTRAORDINARY GENERAL MEETING HELD ON 1 AUGUST 2012
===========================================================
Pursuant to Rule 704(16) of the SGX-ST Listing Manual, the Board of Directors of Zagro Asia Limited (“the Company”) is pleased to announce that at the Extraordinary General Meeting (“EGM”) of the Company held on 1 August 2012, the sole agenda item on the ordinary resolution relating to the approval for the Proposed Settlement Agreement among the Company, Skopini Limited and The Zuellig Group Incorporated as set out in the Notice of EGM dated 17 July 2012 was duly passed by the shareholders.

On behalf of the Board
Poh Beng Swee
Chairman and Chief Executive Officer
1 August 2012
++++++++++++++++++++++++++++
Vested

[pianist]

it doesn't come free - Skopini's parent company had given to Zagro and the SGX-ST certain non-competition or restraint of trade undertakings during Zagro's IPO in 1996.

Skopini wants to be free of these undertakings and has decided to sell out its shares.

[RBM]

I agree that this deal doesn't come for free pianist.

The way I look at it......... is the price that Zagro and its shareholders must pay for this seemingly attractive deal is that they will most likely have an additional competitor to contend with in Asia Pacific. Is that a big price to pay? Two points: a) the main competitors for Zagro's products are really big boys (much, much bigger than tiny Zagro) and Skopini isn't one of those big boys and b) it will take time for Skopini to organically build even a niche agribusiness business across Asia Pacific on a scale that can compete effectively with Zagro.

I have been looking at agribusiness companies in the region that Skopini could acquire (so that they grow inorganically, establishing scale rapidly) ........ and I can't find a single one - I have presumed since the day the Zuellig-Skopini deal was anounced back in February that Skopini already has a target in mind ........... and I've come to the conclusion that it will be the Asia Pacific arm of an existing global agri-player. Time will tell.

Vested

it doesn't come free - Skopini's parent company had given to Zagro and the SGX-ST certain non-competition or restraint of trade undertakings during Zagro's IPO in 1996.

Skopini wants to be free of these undertakings and has decided to sell out its shares.

[wsreader]

Jeremy Grantham pointed out in the July 2012 quarterly letter the growing scarcity of fertilizer and the potential risk of a fertilizer crisis. He wrote in the summary section ".....The costs of fertilizer and fuel will rise rapidly."

The quarterly letter is available at GMO.com

My intention is to share fund manager's view of the industry, not to offer investment merit of this company.

(not vested)

[dydx]

Today (3Aug12), Zagro Asia advanced $0.01 in the morning and last done $0.28. Having taken a quick look at the 'sell' queue, it looks like the supply of shares from those minority public shareholders not willing or unable to support the 32-for-100 Preferential Offering by Skopini Ltd/Zuellig Group at a discounted price of $0.15/share, will soon totally dry up.

[RBM]

Indeed dydx - good observation,

I believe that those unloading will predominantly be Zagro shareholders with CDP registered addresses outsuide Singapore. I personally know of two overseas based shareholders who are "less than pleased" (i.e. an understatement by some margin) that Zagro's decision makers explicitly excluded them from the Zuellig-Skopini offer. They have already unloaded their entire holdings - one of them, who was otherwise very keen on building his stake, had quite a significant holding. I presume this pair will be even more unhappy seeing today's last minute rush to buy units and the positive effect it has had on Zagro's share price.

I have quite some sympathy for their position. The beneficiary of their exclusion from the "32 for 100 at S$ 0.15" deal is Executive Chairman & CEO Poh who is able to pick up their un-acquired units at S$ 0.15. The chosen process is more than contrived and there were far simpler processes which could have been selected by Zagro's BoD, i.e. processes which would have given all minorities a fair crack of the whip, including foreign shareholders e.g. a) buying out Skopini's holding and cancelling the shares (Zagro's balance sheet would have supported that) and b) a rights issue available to everyone. I am very surprised the SGX did not look into this matter - it does not do the SGX's reputation any good whatsover, particularly overseas.

Zagro is a good little company that is well managed - but I know amongst some foreign shareholders the name leaves a sour taste in the mouth.

Vested,

Today (3Aug12), Zagro Asia advanced $0.01 in the morning and last done $0.28. Having taken a quick look at the 'sell' queue, it looks like the supply of shares from those minority public shareholders not willing or unable to support the 32-for-100 Preferential Offering by Skopini Ltd/Zuellig Group at a discounted price of $0.15/share, will soon totally dry up.

[dydx]

Today (3Aug12) is the last market-day for Zagro Asia to trade on a 'CO' basis, and the counter will start trading on 'XO' basis next Monday (6Aug12). It is heartening to note that there were many more buyers today mopping up all the Zagro Asia shares offered up to $0.28, and the counter closed up $0.01 at $0.28, with a high total of 631 lots transacted. Those who bought today at $0.28 will be able to lower their cost to $0.2485 if they take up in full their rights entitlement in the coming 32-for-100 Preferential Offering by Skopini Ltd/Zuellig Group at a discounted price of $0.15/share.

Come next Monday, I wonder would Mr Market mark down Zagro Asia's share price to $0.25 or even lower? I certainly hope not. I guess to a certain extent it would depend on whether those who have bought into Zagro Asia recently and motivated mainly by the attractively priced Preferential Offering, are prepared to treat their purchases as a longer term investment. We shall know from the share price evolution in the next few weeks.

As for me, I intend to keep my Zagro Asia shares for a while and enjoy the further growth of the underlying business as well as the annual dividends. I have a little strange feeling that CEO Poh may sell his controlling stake for a good price - hopefully in the not-too-distant future - which would very likely also allow me to realize a good gain in a latched-on GO.

[dydx]

I just chanced upon an article in NextInsight dated 1Aug12 on Zagro Asia entitled "Unusual sweet offer for ZAGRO ASIA shareholders.....
http://www.nextinsight.net/index.php/sto...agro-offer

From the comments made, it does appear that Zagro Asia and the 32-for-100 Preferential Offering by Skopini Ltd/Zuellig Group at a discounted price of $0.15/share have appealed to some readers there.